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The Next Chapter in Private Markets Growth

December 2, 2025 by Denis Melekhov

As private markets continue to experience significant growth, institutional and retail investors continue to increase their exposure to private equity, real estate, venture capital and other alternative strategies—a trend many in the industry⁽¹⁾ expect to continue. This expansion reflects a clear shift in how asset allocators diversify their portfolios. They must balance resilience and performance during a period defined by opportunity via incremental returns offered by illiquid investments, while simultaneously facing uncertainty fueled by increasing inflation and geopolitical risks.

Key Drivers Behind the Shift

The surge in private markets participation reflects more than cyclical opportunity; it is evidence of a deeper strategic shift. Because asset allocators navigate an environment marked by inflationary and geopolitical pressures, they continue to seek diversification and incremental returns. This momentum is expected to accelerate as anticipated lower interest rates improve transaction dynamics, boosting deal activity, facilitating exits and easing financing conditions for private equity. For many, the flexibility and long-term outlook offered by these investments fuel the appetite to embrace complexity.

We have identified three global trends underpinning the renewed momentum within private markets:

Anticipated lower interest rates are expected to boost deal activity and exit opportunities, especially in private equity, by lowering borrowing costs and meeting investor demand for liquidity.
Declining rates are likely to benefit private real estate, easing financing conditions and potentially helping stabilize or lift valuations following recent declines.
Elevated valuations have sparked growing interest in co-investments and secondary market transactions, as investors seek both exposure and liquidity.

Accelerating Institutional Momentum

Investment data across global pension plans reinforce this trend.

According to recent financial reports⁽²⁾, over half of global pension plans are now over-allocated to private equity, reflecting robust conviction in the asset class’s potential to drive long-term outcomes. At the same time, 66% of institutional investors intend to further increase their private asset allocations over the coming five years. Such engagement signals a shift, not only in how capital is deployed, but also in how these organizations view the role of illiquidity in their broader investment strategies.

This appetite is not limited to institutions. Retail participation in private markets fueled by democratized access vehicles and digital platforms is also accelerating. Together, these forces suggest that private markets will remain a significant engine of growth in the next phase of global investing.

Infrastructure Enabler

With expansion comes complexity. As private markets allocations rise, the operational demands that accompany them grow exponentially. From data aggregation and performance analytics to investor reporting and compliance monitoring, the challenges of managing illiquid portfolios continue to expand.

To take advantage of opportunities while managing risk, investment managers increasingly embrace technology-driven infrastructure, leveraging intelligent automation, AI and advanced analytics. The goals are to drive efficiency, maintain robust reporting standards and deliver precision in workflows. In partnership with specialized technology providers like SS&C, the focus is to achieve operational accuracy, speed and transparency.

The Path Forward

Robust infrastructure is no longer optional; it’s the backbone that enables managers to meet investor expectations and regulatory standards while capturing the benefits of this asset class’s growth trajectory. SS&C FundHub is a one-stop, AI-enabled platform designed specifically for alternative investments. It combines data aggregation, document management and advanced portfolio analytics. Alternative investment firms benefit from seamless and streamlined operations, from automated data collection to portfolio analysis in a sophisticated platform.

To learn how to navigate today’s uncertainty, contact us today.